September 1, 2010

Matix to set up ammonia plant in West Bengal

Aug 31 2010

Matix Fertilisers and Chemicals, the flagship company of the Matix Group, is raising around Rs 3,500 crore from a consortium of banks for one of the world’s largest single stream gas based ammonia cum urea plants in Panagarh, West Bengal.

A person close to the development told Financial Chronicle, that the company, owned by Nishant Kanodia of Datamatics Group, is raising the debt from a consortium of six to eight banks, lead arranged by IDBI Bank in a month’s time.

The equity contribution for the Rs 5,000 crore project is around Rs 1,500 crore, the person said.

Matix is developing a 3 million tonnes per annum (mtpa) plant to cater to the huge shortfall of urea in West Bengal and its surrounding regions of Orissa, Bihar and Jharkhand.

The Matix plant will help in reducing this shortfall to 4 mtpa in three years time in a radius of around 350 kilometers. The company is also setting up a large dealer networks for marketing and distribution of urea to farmers in the region.

“Matix has identified around 1000 dealers and is expected to shortlist arou¬nd 500-600 dealers to distribute the product to the farmers in short time,” the person said.

In the first phase of development the company is setting up around 1.5 mtpa of ammonia and urea capacity, which would be commissioned by 2012.

The orders for equipment have been finalised with global equipment suppliers, and construction on the site has begun. KBR of the US and Saipem of Italy are among strategic inter¬national partners providing technology, basic and detail¬ed engineering, procurement, construction and comm¬issioning support. The Matix plant will be the first urea plant in the world with feedstock supply of coal bed methane (CBM) gas exclusively sourced from Essar Group’s Raniganj CBM block, near Panagarh in West Bengal.

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Drought-affected West Bengal hit by lack of farm investment

By Romita Datta

LIVE MINT Posted: Tue, Aug 31 2010. 9:26 PM IST

The drought, caused by a 32% shortfall in rain, has affected at least one-fifth of the state’s cultivable land

Burdwan, West Bengal: There’s suddenly a flurry of activity in Karotia, a nondescript village in West Bengal’s Burdwan district. Lately, a lot of politicians and state government officials have been visiting the village, and they say work on a nearly forgotten 14km irrigation canal is going to start soon.

It’s been nearly 36 years since the state government first proposed to dig the canal, recalls Azizur Haque, the local panchayat chief. It was to have brought enough water to irrigate some 5,000 acres of land, benefiting at least 30,000 farmers, he says. Yet, the canal didn’t materialize because the state’s environment department didn’t clear the proposal.

Click here To view a slideshow on problems faced by West Bengal farmers due to decreasing rainfall and government apathy

But thanks to one of their brethren, Karotia’s farmers might not have to wait much longer.

Jitu Bagdi, a farmer from this village, killed himself on 23 August. Hounded by moneylenders, he drank poison after his crop failed because of the drought, says his widow, Rupa Bagdi.

Since then, leaders from across political parties and state government officials are bending over backward to “do meaningful things” for Karotia’s farmers. Besides offering financial support to Rupa Bagdi to launch her own business, the state government has revived the abandoned irrigation canal project.

West Bengal is facing the worst rain shortage in many decades, and the state government has declared a drought in 11 out of 19 districts, including the highly productive ones in the southern part of the state such as Burdwan and Hooghly.

The crop loss has been estimated at Rs 6,250 crore, according to West Bengal’s finance minister Asim Dasgupta, and the people of the state have already begun feeling it—in Kolkata, the price of rice, the most widely consumed foodgrain, has already started rising as the state braces for a foodgrain deficit of 2.7 million tonnes (mt).

The drought, caused by a 32% shortfall in rain, has affected at least one-fifth of the state’s 5.2 million ha of cultivable land, and it shows that West Bengal’s Left Front government led by the Communist Party of India (Marxist), or CPM, that has ruled the state for 33 years, has done little to create irrigation facilities, say economists.

Even last year, there was some rain shortage, but it affected only around 200,000 ha.

“It is sad that for a state like West Bengal, where at least 60% of the population is dependent on agriculture, irrigation is not (the) top priority,” says Mihir Rakshit, a former professor of economics at the University of Calcutta. “It’s the same across the country despite so many droughts and crop failures—it’s really unfortunate.”

The state has allocated as little as Rs459 crore for its irrigation department in the current year. What makes matters worse is the fact that the state government doesn’t charge farmers for irrigation facilities such as pump sets and tubewells, which means the department on its own does not generate any revenue, according to a state government official, who did not want to be named.

“It’s not surprising therefore that even in this situation, only 5,938 state government-run minor irrigation facilities (pump sets and tubewells) are currently available,” he said. “We used to have around 6,000 such facilities in 1990. Now it’s fewer because at least 543 are out of commission for want of repair.”

The state government provides irrigation facilities to only around 339,000 ha of land, whereas private facilities serve another 1.3 million ha. The target was to bring at least 3.2 million ha of land in the state under irrigation, he added. “It would take years to get close to that target.”

Besides spending more on irrigation facilities, state governments should encourage research on dry farming and water management, says Rakshit.

West Bengal is now drawing up plans to support “alternative farming”, or cultivation of crops that require less water than paddy, according to Dasgupta. The state government promises to distribute seeds and train farmers, but “alternative farming” can only happen, if at all, next year.

Meanwhile, the state has sanctioned Rs354 crore for immediate relief measures, and has requested Rs600 crore more from the Centre.

The drought couldn’t have come at worse time for the CPM: it is facing an anti-incumbency wave, and assembly polls in the state are due next year.

The Congress-led United Progressive Alliance (UPA) at the Centre isn’t supportive “for obvious reasons”, says CPM state secretariat member Robin Deb. The Trinamool Congress, the state’s main opposition party, which is a part of the UPA, isn’t pressuring the Centre either, according to Deb.

Subsidies are not long-term solutions, according to Abhirup Sarkar, a professor of economics at Kolkata’s Indian Statistical Institute. “Public investment is the need of the hour,” he said. “Agriculture has been neglected by the West Bengal government for at least 20 years, and that has led to a decline in agricultural productivity.”

The per capita production of foodgrains in West Bengal is 525gm, against the national average of 413gm, but because per capita purchasing power is very low in West Bengal, cases of starvation and poverty are widespread in the state, according to Sarkar.

At least two farmer suicides till now have been blamed on the drought, and both farmers were indebted to money lenders. People are forced to borrow at exorbitant rates because state cooperatives lend only around Rs7,400 per acre, whereas farmers say they need at least Rs45,000.

Banks are doing their bit by rescheduling loans for farmers affected. The country’s biggest lender, State Bank of India, is to defer by a year the repayment of at least Rs500 crore for the drought-hit farmers of West Bengal, according to Suriender Kumar, chief general manager of the bank for its West Bengal circle.

Agriculture Insurance Co. of India Ltd, which provides risk cover to farmers, expects claims from West Bengal this year to be at an all-time high, topping the Rs40 crore paid by it three years ago following floods. Delayed monsoons triggered claims of Rs18 crore last year, according to Dasarathi Singh, the regional general manager of the insurer.

This year, the situation is much worse. But will West Bengal face a famine? That’s the state administration’s biggest fear. It may be considering the fact that last year, when the rain shortfall affected only around 200,000 ha of cultivable land, the state could produce just 13.8 mt of foodgrains, and had nearly no surplus.

Manish Basu contributed to this story.